<PAGE>


                                                                    Exhibit 10


                                SUPPLY AGREEMENT


                  THIS SUPPLY AGREEMENT ("this Agreement"), effective as of the
date of the latest signature below, is entered into by ALLIANCE PHARMACEUTICAL
CORP. ("APC"), located at 3040 Science Park Road, San Diego, California 92121
and FLUOROMED L.P. ("FMLP"), located at 2350 Double Creek Drive, Round Rock,
Texas 78664.

                                    RECITALS

A.       APC is developing a proprietary ultrasound contrast agent for use in
         echocardiological and radiological diagnostic applications ("the
         Product"), a key component of which is neat medical-grade
         perfluorohexane ("MG-PFH"), as more particularly described in Exhibit
         A.

B.       FMLP possesses the expertise to manufacture neat medical-grade
         perfluorohexane and has developed the processes necessary to
         manufacture MG-PFH in commercial quantities from chemical raw
         materials.

C.       APC and FMLP desire to enter into this Agreement to provide for FMLP's
         supply of MG-PFH to meet APC's clinical research, regulatory and
         commercial manufacturing requirements.

                  THEREFORE, in consideration of the mutual promises contained
in the following provisions, the parties agree as follows:

                                   Article 1.
                                   DEFINITIONS

                 The following terms have these definitions and are incorporated
in this Agreement by this reference:

         1.1     CONTRACT YEAR. "Contract Year" means (a) the four-Quarter year
beginning with the first Quarter following the FDA Approval Quarter or (b) any
subsequent four-Quarter year beginning on the anniversary of the first day of
the first Contract Year.

         1.2     FDA APPROVAL. "FDA Approval" means the FDA's approval of APC's
NDA (New Drug Application) for the Product.

         1.3     FDA APPROVAL QUARTER.  "FDA Approval Quarter" means the Quarter
in which FDA Approval occurs.

         1.4     APC means collectively APC and APC Affiliates.

         1.5     APC AFFILIATE. "APC Affiliate", means (a) any wholly-owned
direct or indirect subsidiary of APC, (b) any other corporation in which APC
directly or indirectly owns more than 50% of the voting stock or (c) any
partnership or joint venture in which APC directly or indirectly owns more than
a 50% interest.


*     INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED
      SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


<PAGE>


         1.6     PRODUCT LAUNCH. "Product Launch" means the first commercial
sale of the Product following FDA Approval and test marketing, if any.

         1.7     PFH MICROBUBBLE. "PFH Microbubble" means any discrete entity
containing gaseous or vaporous PFH dispersed in a liquid continuous phase.

         1.8     QUARTER. "Quarter" means (a) the three-month period ending with
the month in which FDA Approval occurs or (b) any prior or subsequent
three-month period.

         1.9     FDA.  The United States Food and Drug Administration.

         2.0     OTHER. The following terms have the meanings given in the
designated paragraphs:

<TABLE>
<CAPTION>

                        Term                          Paragraph No.
                        ----                          -------------
                        <S>                           <C>
                        FMLP Claims and Losses             8.6
                        CDA                                6.1
                        Field                              2.8
                        First Renewal Term                 7.1
                        Foreign DMF                        5.3
                        Initial Term                       7.1
                        Pre-Launch Period                  2.2
                        Price Schedule                     3.3
                        Release                            3.5
                        Renewal Term                       6.1
                        Second Renewal Term                6.1
                        Specification                      3.1
                        Supply Cylinder                    3.8
                        Unspecified Constituents           8.1

</TABLE>


                                   Article 2.
                                SUPPLY OF MG-PFH

         2.1     DEVELOPMENT QUANTITIES. Until the start of the Pre-Launch
Period, FMLP shall supply MG-PFH to APC as follows:

                  (a) GENERAL. FMLP shall use its best efforts to supply MG-PFH
in such reasonable quantities as APC reasonably orders to enable it to perform
preclinical and clinical trials of the Product.

                  (b) SHIPMENT. FMLP shall use its best efforts to supply MG-PFH
to APC under this Paragraph 2.1 in accordance with APC firm written purchase
orders, and shall ship each order on or before the date specified in APC's
purchase order, provided such date is agreeable to both parties, but no later
than 90 days after the date of receipt of APC's purchase order. In no event,
however, shall FMLP be required to ship an order earlier than 30 days after the
date of receipt of APC's purchase order.


                                       2
<PAGE>


         2.2     PRODUCT LAUNCH QUANTITIES. APC wants to be in a position to
initiate Product Launch as soon as practicable following FDA Approval. To this
end, during the period (the "Pre-Launch Period") from completion of a successful
pre-approval inspection ("PAI") by the FDA, if any, of FMLP's facility to ensure
that it is in compliance with good manufacturing practices with respect to the
MG-PFH production, through the end of FDA Approval Quarter, and subject to the
final paragraph of this Paragraph 2.2, FMLP shall supply MG-PFH to APC as
follows:

                  (a) GENERAL. FMLP shall use all reasonable efforts to supply
MG-PFH in such quantities as APC orders to enable APC to have an inventory of
Product on hand that it determines to be adequate to meet anticipated demand
following the Product Launch.

                  (b) SHIPMENT. FMLP shall use all reasonable efforts to supply
MG-PFH to APC under this Paragraph 2.2 in accordance with APC's written purchase
orders issued at any time during the Pre-Launch Period (or prior to such
Pre-Launch Period as the parties may mutually agree), and shall use all
reasonable efforts to ship each order on or before the date specified in APC's
purchase order, as agreed to between the parties, but no later than 90 days
after the date of receipt of APC's purchase order. In no event, however, shall
FMLP be required to ship an order earlier than 45 days after the date of receipt
of APC's purchase order.

                  (c) MAXIMUM REQUIRED SUPPLY. At the time of APC's New Drug
Application APC will forecast its requirements for MG-PFH supply during the
Pre-Launch Period and FMLP shall not be required to supply * of such APC
forecast during the Pre-Launch Period.

                  The parties acknowledge that the period during which PAI
approval, FDA Product Approval, and Product Launch takes place is one of
uncertainty and rapidly changing strategies, forecasts, and production plans.
The parties acknowledge that it is extremely difficult to predict APC's MG-PFH
requirements and FMLP's MG-PFH capacity and processing time during this period
of high uncertainty and evolving plans. Accordingly, they agree that this
Paragraph 2.2 shall strictly be treated as a general guideline to be observed
under reasonable circumstances. Otherwise, the parties shall reasonably consult
and cooperate with respect to APC's needs and FMLP's capacity in advance of
Product Launch to ensure that APC's requirements may be met in a timely fashion.

         2.3     COMMERCIAL QUANTITIES. Each Quarter beginning with the first
Quarter following the FDA Approval Quarter, FMLP shall supply MG-PFH to APC as
follows:

                  (a) GENERAL. Subject to Paragraph 2.7, FMLP shall supply, and
if FMLP is not in Default (as defined in Section 7.2(c) or otherwise failed to
deliver the quantity of MG-PFH ordered (notwithstanding the *        limitation)
APC shall purchase from FMLP, *              * of MG-PFH for the Product. FMLP
shall not be required to supply a greater amount of MG-PFH during the Quarter
than *            of APC's first estimate of its requirements for the Quarter
provided to FMLP pursuant to Paragraph 2.6.


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<PAGE>


                  (b) SHIPMENT. FMLP shall supply MG-PFH to APC under this
Paragraph 2.3 in accordance with this Agreement and APC's written purchase
orders issued at any time following FDA Approval, and shall ship each order on
or before the date 120 days from the date of order placement or earlier as
agreed to between the parties and subsequently specified on the purchase order.
In no event, however, shall FMLP be required to ship an order earlier than 45
days after the date of receipt of APC's purchase order, if such order quantities
are not in inventory on the date of order.

                  (c) MINIMUM ORDER.  Each APC purchase order shall be for a
minimum of *                of MG-PFH.

         2.4     FMLP INVENTORY. Each Quarter beginning with the first Quarter
following FDA Approval Quarter, unless APC is in default, FMLP shall maintain a
finished inventory of MG-PFH equal at all times to *
                                                       during the preceding four
Quarters (whether or not in fact supplied by FMLP in a timely manner). The risk
of inventory becoming unusable as a result of changes in Specifications, cGMP,
or APC demand for said inventory shall be born entirely by APC. Inventory shall
be rotated on a "First in First Out" basis by FMLP to reduce such aforementioned
risks of said inventory becoming unusable. APC agrees that with respect to any
finished inventory required to be maintained by FMLP hereunder and which has
been maintained by FMLP for in excess of *          , APC shall purchase such
inventory within thirty (30) days of a written request by FMLP.

         2.5     FMLP SUPPLY CAPACITY. FMLP represents and warrants that its
existing facility has and will maintain the capacity to produce *             of
MG-PFH per month, and, unless APC is in default under this Agreement, within
ninety (90) days of a written request by APC, said request based upon APC's
estimated needs for additional manufacturing capacity, such capacity will be
increased and maintained at up to *            of MG-PPH per month. Each Quarter
beginning with the first Quarter following the FDA Approval Quarter, FMLP shall
maintain the capacity to supply, during the current Quarter and each of the next
three Quarters, *          of APC's first estimate of its requirements for each
of those Quarters provided to FMLP pursuant to Paragraph 2.6.

         2.6     APC FORECASTS. No later than 30 days after submission of the
NDA for the Product, APC shall Provide FMLP with an estimate of APC's expected
requirements of MG-PFH during the first Quarter following the FDA Approval
Quarter and each of the next three Quarters. At least 30 days prior to the start
of the next Quarter (the second Quarter following the FDA Approval Quarter) and
each subsequent Quarter, APC shall provide FMLP with an estimate of APC's
expected requirements of MG-PFH during that Quarter and each of the next three
Quarters. Each four-Quarter estimate after the first one may revise the
estimates that APC previously made in respect of the first three Quarters.
During APC's early Quarters of commercial manufacturing of the Product, APC, as
reasonable, shall consult more frequently with FMLP concerning its expected
requirements and changes to APC's prior forecasts. Such forecasts shall be made
in good faith but shall not be regarded as firm purchase orders pursuant to
Paragraph 3.5.


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<PAGE>


         2.7     APC PURCHASE REQUIREMENTS. APC shall purchase MG-PFH from FMLP
as follows:

                  (a) PURCHASE OBLIGATION. Unless FMLP is in Default under this
Agreement APC shall purchase * of MG-PFH for the Product from FMLP in accordance
with this Agreement.

                  (b) RIGHTS TO MANUFACTURE. Provided there has been no Default
by FMLP under this Agreement APC agrees, during the term hereof that it will *
                                                                 for MG-PFH from
FMLP on the same terms contained in this Agreement.

                  (c) COMPLIANCE. APC's compliance at any time with this
Purchase obligation shall be determined by reference to the aggregate quantity
of MG-PFH that APC has ordered from FMLP and all other sources during the
current Quarter to date and the preceding three Quarters.

                  (d) MODIFICATION. APC's purchase obligation under Subparagraph
(a) may be terminated by APC by written notice;

                      (1) If and when, for any reason, FMLP is in Default or
unable to supply all of APC's requirements of MG-PFH in the amounts and by the
delivery dates specified in APC's purchase orders (subject to the limitations in
Paragraphs 2.1, 2.2 and 2.3 on the earliest date that FMLP may be required to
ship any order); provided that the purchase obligation may be terminated only
after a Default has occurred more than once (1) per year: provided further that
if orders exceed the maximum amounts FMLP is required to deliver (i.e. *
of previous estimate), FMLP shall be given a reasonable time to produce or
increase capacity as may be necessary to provide the requested orders. However,
FMLP shall be given a reasonable time as may be necessary to make changes to
comply with any changes in the MG-PFH manufacturing techniques, specifications
or analytical procedures requested or mandated by APC or any federal agency.

                      (2) At such time as FMLP may give formal notice of
termination under Paragraph 7.2(d). Upon the giving of such notice, the
aforementioned purchase obligation is reduced *          in the first two (2)
years after notice and to *          in the third year.

                  (e) RESEARCH AMOUNTS. Notwithstanding anything herein to the
contrary, APC may purchase MG-PFH from other parties for internal research
purposes.

         2.8     APC MINIMUM PURCHASES. Pursuant to APC purchase forecasts
pursuant to Paragraph 2.6, APC shall purchase from FMLP a minimum amount *
(pro rata for partial years) until FDA Approval and *            thereafter.

                 Additionally, FMLP shall not sell or otherwise provide MG-PFH
to any person or entity for any intravenous formulation comprising PFH
Microbubbles or formulations capable of forming PFH Microbubbles upon
intravenous administration as long as all minimum purchase


                                       5
<PAGE>


amounts in above are purchased by APC and/or APC licensees from FMLP. Should the
above minimum purchases not be maintained for reasons other than a Default by
FMLP, FMLP shall not be restricted in any manner in its sales and supply of
MG-PFH to others.

                 APC's obligation to purchase these minimum purchase amounts is
subject to the following conditions and limitations:

                 (a) COMPLIANCE. The determination whether APC has purchased the
minimum amount of MG-PFH each year until FDA Approval and each Contract Year
thereafter shall be determined by each year's cumulative shipments of MG-PFH
that are shipped in compliance with APC's purchase order shipment dates and
volumes (pounds of MG-PFH) from FMLP. FMLP shipments that are shipped later than
APC requested shipment dates and would result in APC not complying with the
annual minimum purchase amounts will, for the purposes of calculating minimum
purchase, be deemed to have been shipped on the requested delivery date. Said
purchase order shipment dates shall comply with paragraphs 2.2(b), and 2.3(b)
and (c).

                 (b) PURCHASE OF REQUIRED BALANCE. If APC fails to issue
purchase orders for the required minimum amount of MG-PFH during any year, APC
shall issue a purchase order for the balance of the MG-PFH that it was required
to purchase no later than 30 days after the end of the year. This purchase order
shall not be considered to relate to the then current year and shall not be
taken into account in determining whether APC has issued purchase orders for the
required minimum amount of MG-PFH during such current year (except to the extent
that it orders a quantity of MG-PFH in excess of the balance of MG-PFH that APC
is required to purchase). The price at which MG-PFH shall be sol- d to APC
pursuant to this purchase order for required minimum amount of MG-PFH purchase
order shall be the price in effect as of the last day of the year to which the
purchase order relates (except, again, to the extent that it orders a quantity
of MG-PFH in excess of the balance that APC is required to purchase, for which
the price shall be the price in effect at the time that the purchase order is
issued). Said purchase order shall have a delivery date of the earliest date
that FMLP can ship the MG-PFH.

                 (c) EQUITABLE REDUCTION. If during any year APC's purchase
obligation under Paragraph 2.7(a) is suspended for any reason for any period,
the minimum amount of MG-PFH that APC is required to purchase during the year
shall be reduced as appropriate to reflect such suspension.

                 (d) NO APPROVAL. If, by * , the Product has not received FDA
Approval, APC's minimum purchase obligations shall terminate and FMLP shall be
free without the limitations set forth earlier in this Paragraph 2.8 to sell
MG-PFH to others, even if sale of MG-PFH to "others" includes "others" usage of
MG-PFH for any intravenous formulation comprising PFH Microbubbles or
formulations capable of forming PFH Microbubbles upon intravenous
administration. Nothing herein shall be deemed to be a grant of any license or
other right to any party, including FMLP, to any patents, patent applications,
know-how or other technology of APC.


                                       6
<PAGE>


         2.9     APC LICENSEES. If any current or future licensee of APC desires
under the terms of its license the right to manufacture the Product utilizing
MG-PFH as a key ingredient (either for sale to APC or for sale to sublicensees,
distributors or directly to end users), APC shall:

                 (a)      *
                                                                    ,

                 (b) Notify FMLP of any such licensee(s)' intent to exercise the
right to manufacture the Product utilizing MG-PFH,

                 (c) Obtain a meeting for FMLP with such licensee(s) and/or
sublicensee(s) to discuss MG-PFH supply, and

                 (d) Recommend the merits of FMLP MG-PFH to its licensee(s)
and/or sublicensee(s) if consistent with APC's actual experience of FMLP's
performance of this Agreement.

                                   Article 3.
                                 TERMS OF SUPPLY

         3.1     SPECIFICATION. All MG-PFH which FMLP supplies shall meet or
exceed the specification set forth in Exhibit A (the "Specification").

         3.2     MANUFACTURING. All MG-PFH that FMLP supplies shall be
manufactured as follows:

                 (a) EARLY DEVELOPMENT QUANTITIES. All MG-PFH which FMLP
supplies pursuant to orders under Paragraph 2.1 prior to establishment of a DMF
as described in Article 5 shall be manufactured in compliance with or pursuant
to such process methodologies, standards, and controls and the like as APC and
FMLP shall jointly determine to be required or appropriate, and in compliance
with or pursuant to all required regulatory validations, permits, registrations,
licenses and approvals.

                 (b) DEVELOPMENT, PRODUCT LAUNCH AND COMMERCIAL QUANTITIES. All
MG-PFH which FMLP supplies pursuant to orders under Paragraphs 2.1, (subsequent
to the filing of a DMF) 2.2 or 2.3 shall be manufactured in compliance with or
pursuant to (i) FMLP's DMF for MG-PFH, (ii) all applicable current good
manufacturing practices, (iii) all other applicable FDA regulations or
requirements, (iv) all other applicable federal, state and local laws and
regulations and (v) all required FDA and other regulatory validations, permits,
registrations, licenses and approvals.

                 (c) SUBCONTRACTOR. If, after the Product Launch, FMLP desires
to subcontract the manufacturing of commercial quantities of MG-PFH to a
qualified subcontractor with special expertise in current good manufacturing
practice procedures and specialty chemical manufacturing, then FMLP shall
request that APC authorize the proposed subcontracting arrangement sufficiently
in advance of the proposed effective date of the subcontracting arrangement so
that there will be no interruption in the supply of MG-PFH. APC will not


                                       7
<PAGE>


unreasonably withhold or delay its authorization so long as APC is not required
to amend its NDA or IND due to the proposed subcontracting (or if APC elects to
amend such filings, the FDA approves such amendments) and APC is furnished
reasonably in advance of the proposed effective date of the subcontract with the
following: (1) evidence of a technology transfer to the proposed subcontractor;
(2) evidence of the proposed subcontractor's experience and qualifications; (3)
adequate assurances that APC can continue, without interruption, to reference an
accepted DMF in accordance with Paragraph 5.2, notwithstanding the
subcontracting arrangement; (4) an agreement by the subcontractor to abide by
all of the terms and conditions of this Agreement; and (5) any other agreement
from the subcontractor required by APC to ensure compliance with this Agreement
and APC's right to inspect the subcontractor's facilities and perform vendor
audits. If any Subcontracting arrangement is authorized, FMLP shall remain
primarily responsible for the performance of this Agreement and shall be
responsible for supervising the subcontractor. This Section 3.2 does not
authorize FMLP to disclose any confidential information of APC to any party
without the prior written consent of APC.

         3.3     PRICE. The price of each order of MG-PFH shall be as follows:

                 (a) DEVELOPMENT QUANTITIES, For orders of MG-PFH under
Paragraph 2.1 the price shall be                     *                         .

                 (b) PRODUCT LAUNCH QUANTITIES. For orders of MG-PFH under
Paragraph 2.2, the price shall be determined in accordance with the Price
Schedule attached as Exhibit B ("Price Schedule"). *                           .

                 (c) COMMERCIAL QUANTITIES. For orders of MG-PFH under Paragraph
2.3, the price during the first Contract Year shall be determined in accordance
with the Price Schedule that was in effect for Product Launch quantities on the
last day of the Pre-Launch Period. The Price Schedule is subject to increase
after the first Contract Year as provided in Paragraph 3.4.

3.4      PRICE CHANGES.

                 (a) After *                    , whichever is earlier, FMLP may
increase the price for commercial quantities of MG-PFH *
                              since the effective date of the last price change.
Price increases are meant to *               and shall be
deemed a reasonable manner of price change.  FMLP shall determine *
                . FMLP shall give APC written notice of any price change, which
shall be effective as of the date specified in FMLP's notice or 30 days after
APC's receipt of the notice, whichever is later, and shall provide with its
notice an explanation in reasonable detail of the manner in which the price
increase was determined. Should any FMLP price increase pursuant to this
Paragraph 3.4 *


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<PAGE>


*
                . Upon APC's submission,*
                                                              and this agreement
shall continue until its defined expiration in Article 7.  *




           . Upon APC's purchase of commercial quantities exceeding *
                              from another company, *


                 (b) In the event that FMLP should sell *                      .

         3.5     APC PURCHASE ORDERS. A specific commitment to purchase MG-PFH
shall be established by APC's issuance of a Purchase Order against this
Agreement ("Release"). A Release will, by reference, incorporate the pricing,
delivery, Specification and other terms and conditions contained herein. The
parties hereto agree that the supply of MG-PFH by FMLP hereunder shall be
subject to and governed by the terms and conditions herein. None of the prices,
specifications, terms or conditions set forth on any purchase or order form,
invoice or like document shall change, modify, delete or add to the provisions
of this Agreement, unless mutually agreed to by the parties in writing. Each APC
Release shall be considered firm, and shall not be subject to change or
cancellation without FMLP's written consent. For purposes of determining when a
Release has been issued, it shall be considered to have been issued on the date
that it bears if it is received by FMLP no later than the fourth business day
following that date; if it is received later than the fourth business day, it
shall be considered to have been issued when received by FMLP. The orders will
be binding upon acceptance by FMLP; such acceptance not to be unreasonably
withheld or delayed. FMLP shall give APC prompt notice in writing of its
rejection of any Release. FMLP's failure to give such notice within 30 days
after issuance of the Release or its commencement of any work on the Release
shall constitute its acceptance of the order.

         3.6     PAYMENT. APC's payment for all orders of MG-PFH and other
charges agreed to in this Agreement shall be paid within 30 days after receipt
of FMLP's invoice, payable to FMLP's office in Round Rock, Texas. FMLP shall not
invoice APC for MG-PFH until the MG-PFH has been shipped from FMLP to the
address specified in APC's purchase order. In the event overdue invoices are
outstanding, FMLP will not be required to make additional shipments. Payment
shall be made in U.S. dollars. In the event APC fails at any time to pay any
amount owing under this Agreement when due, in addition to any rights FMLP may
have at law or in equity, after ten days written notice, FMLP shall have the
right to require full or partial payment in advance on all future orders and/or
revoke any credit previously extended and require immediate payment of any


                                       9
<PAGE>


outstanding invoices from FMLP. In addition, overdue amounts shall accrue
interest at a rate of 2% per month or the maximum legal rate, if lower.

         3.7     SHIPMENT. FMLP shall ship, FOB FMLP shipping point, each order
of MG-PFH to the destination specified in APC's Release, or if no destination is
specified, to APC at 6175 Lusk Boulevard, San Diego, California 92121. APC may
specify in its Release the common carrier to be used, subject to FMLP's approval
in its reasonable discretion. If APC fails to specify a common carrier, or if
FMLP, in its reasonable discretion, does not approve of the common carrier
specified, FMLP shall select the common carrier. All freight and insurance
charges on each order of MG-PFH shall be paid by APC as "Collect" or "Third
Party Billing" freight charges.

         3.8     Supply CYLINDERS. FMLP shall ship all orders of MG-PFH in
FMLP's own reusable stainless steel cylinders holding *             (the "Supply
Cylinder"). FMLP shall dedicate these Supply Cylinders to the purpose of
supplying MG-PFH to APC and shall clean and prepare each cylinder before use to
prevent contamination or loss of contents. APC shall promptly return each
cylinder, with valves securely closed to FMLP when empty, in substantially the
same condition in which it was received, reasonable wear and tear excepted, and
shall prepay the related freight and insurance charges. All Supply Cylinders
shall be returned to FMLP within six months to avoid cylinder rental charges,
per Exhibit B. Lost or severely damaged Supply Cylinders shall be subject to
replacement at APC's expense, per rates shown in Exhibit B. APC shall take
reasonable precautions to prevent material of any type from being introduced
into the cylinder while it is in APC's possession. Lost Supply Cylinders are
cylinders that have not been returned to FMLP within one year of APC's receipt
thereof. If foreign matter is introduced to the Supply Cylinders, APC will pay *
for cleaning the contaminated Supply Cylinders, and if the contaminated Supply
Cylinders cannot be cleaned for continued MG-PFH service for APC, the Supply
Cylinders will be charged to APC per rates shown in Exhibit B.

         3.9     TAXES AND DUTIES. APC shall pay any and all applicable sales or
use taxes in connection with any order of MG-PFH. Any other tax (other than
income taxes), howsoever denominated and howsoever measured, imposed upon the
sale, transportation, delivery, use or consumption of MG-PFH shall be paid
directly by APC, or if paid by FMLP shall be invoiced to APC as a separate item
and paid by APC to FMLP within 30 days of FMLP's invoice. APC shall also pay all
applicable export, import or excise taxes, clearance, handling and brokerage
fees, customs duties and other cost of delivery incurred in connection with any
order delivered to APC outside of the United States. FMLP may add the amount of
these taxes, duties and handling fees to its invoice to APC for the order.

         3.10    TITLE AND RISK OF LOSS. Title to and risk of loss for each
shipment of MG-PFH shall pass to APC when the shipment is duly tendered to the
air, motor freight, or delivery service at the FMLP shipping dock for shipment.

         3.11    CERTIFICATE OF ANALYSIS. FMLP shall test (using its own
approved validated methods) and inspect each Supply Cylinder of MG-PFH prior to
shipment for conformity to the Specification and, upon shipment, shall provide
APC with a certificate of analysis reporting the results of the analytical test
or tests performed for each specification. FMLP shall continuously


                                       10
<PAGE>


consult with APC regarding any change in the selection, design and method of
conducting these analytical tests so that APC is reasonably assured of their
accuracy, reliability, and can replicate the tests for its own use. FMLP shall
not ship any Supply Cylinder of MG-PFH that does not conform to the
Specification and that has not been analyzed in accordance with the required
methods of analysis applicable to MG-PFH. Changes in analytical tests, whether
imposed by APC or others, may result in higher costs for FMLP which will be
passed on to APC at cost and not trigger the price change arrangement as stated
in Paragraph 3.

         3.12    ACCEPTANCE OF MG-PFH BY APC. APC shall inspect each shipment of
MG-PFH as follows:

                 (a) INCOMING INSPECTION. APC shall weigh each cylinder promptly
upon receipt to confirm the amount of MG-PFH delivered. APC shall inspect and
analyze each delivered Supply Cylinder at any time after delivery as APC
determines; provided, however, APC, at a minimum, shall analyze each Supply
Cylinder in accordance with the methods of analysis attached to the
Specifications.

                 (b) NOTICE OF REJECTION. APC may reject any Supply Cylinder,
because it does not conform to the Specification or because it was not
manufactured in compliance with the requirements of Paragraph 3.2, by written
notice of rejection to FMLP given at any time during the 45 day period following
delivery of the Supply Cylinder and describing in reasonable detail the basis of
APC's rejection. If APC does not give written notice of rejection during this 45
day period following delivery of the supply cylinder, or if it gives written
notice of rejection after the expiration of this period, APC shall be considered
to have accepted the Supply Cylinder.

                 (c) INFORMATION AND ASSISTANCE. FMLP shall make available to
APC all appropriate validated analytical methods and associated records and
data, including technical assistance, for the express purpose of allowing APC to
consistently inspect deliveries of MG-PFH for conformance to the Specification.
All such analytical techniques, data, assistance, etc. shall be regarded as
Confidential Information and fall under the duty of confidentiality of Article
6. In the event of non-conformance to the Specification, APC and FMLP shall
consult with each other in order to explain and resolve the discrepancy between
each other's determinations. If such consultation does not resolve the
discrepancy, the parties agree to nominate and procure an independent, reputable
laboratory, acceptable to both parties, which shall carry out determinations
based on samples taken from such shipment, using the methods of analysis
attached to the Specifications, and the resulting determinations shall be
binding on APC and FMLP for the purposes hereof. APC and FMLP shall share
equally the expenses of such independent analysis. In the event it is determined
pursuant to the provisions of this subsection (c) that the rejected Supply
Cylinder met the Specification, APC shall reimburse FMLP for any return freight
incurred under this subsection (c).

                 (d) Replacement. FMLP shall refund the purchase price and all
other costs of shipment paid by APC, or at APC's option, replace any rejected
order of MG-PFH, at no additional cost to APC, with a like amount of MG-PFH
conforming to the Specification and manufactured in compliance with all of the
requirements of Paragraph 3.2. FMLP shall deliver this


                                       11
<PAGE>


replacement MG-PFH no later than 45 days after APC's notice of rejection
regarding the rejected order.

                 (e) RETURN. At FMLP's written request for any rejected order of
MG-PFH to be returned, APC shall ship the rejected order back to FMLP, freight
collect. If FMLP does not make such a request within 30 days after APC's notice
of rejection, APC, in its discretion, may either dispose of the MG-PFH (but not
the Supply Cylinder) at FMLP's expense or ship the rejected order back to FMLP,
freight collect.

         3.13    CONFLICTING TERMS. The terms of this Agreement shall control in
the event of any contrary, additional or inconsistent terms in any purchase
order, acceptance, order acknowledgment, confirmation or like document issued by
either APC or FMLP in connection with any order of MG-PFH, unless mutually
agreed in writing.

         3.14    CHANGES IN FMLP'S MANUFACTURING. FMLP shall consult with and
must obtain written consent from APC reasonably in advance of making any changes
in the facility, materials, equipment, methods, or procedures used in the
manufacturing, storage, containing, transporting, or other aspect of the
production, storage, and transport of MG-PFH which would or might:

                 (a) Cause a potential change in the MG-PFH purity profile;

                 (b) Require FMLP to revalidate its own process or methods;

                 (c) Require APC to re-audit FMLP;

                 (d) Require APC or FMLP to submit or resubmit any
documentation to the FDA.

         3.15    APPLICATIONS FOR FDA APPROVALS. APC shall be responsible for
the preparation and submission of any and all applications to the FDA as may be
required by law and for all marketing clearances, approvals, and/or licenses
from the appropriate regulatory agencies necessary in connection with the sale
and shipment of Product hereunder, including, without limitation, any
investigational new drug application required in order for FMLP to make
shipments hereunder, except for the filing of the Drug Master File.

                                   Article 4.
                                   INSPECTIONS

         4.1     APC PURCHASES. APC shall maintain accurate records relating to
its purchases of MG-PFH from FMLP and other sources for purposes of showing
APC's compliance with its purchase obligation under Paragraph 2.7. FMLP shall
have the right to have these records inspected once each calendar year, during
normal business hours and on ten days' prior notice, by an independent certified
public accountant retained by FMLP and approved by APC (which shall not
unreasonably withhold its approval) for the purpose of verifying APC's
compliance with its purchase obligation. APC may take reasonable steps to
provide FMLP's accountant only with such information as may be necessary to this
verification, and FMLP's accountant shall report to FMLP only that APC has
complied with the terms of this Agreement. As a condition of the


                                       12
<PAGE>


inspection, APC may require FMLP's accountant to sign a confidentiality
agreement to this effect. The report to FMLP by its accountant shall be
considered confidential Information.

         4.2     FMLP AGREEMENT COMPLIANCE. FMLP shall maintain accurate records
relating to APC's purchases of MG-PFH, FMLP's pricing and invoice costs, and
FMLP's compliance with respect to limitations on the sale of MG-PFH to other
parties pursuant to Section 2.8. APC shall have the right to have these records
inspected once each calendar year, during normal business hours and on 10 days'
prior notice, by an independent certified public accountant retained by APC and
approved by FMLP (which shall not unreasonably withhold its approval) for the
purpose of verifying FMLP's compliance with the terms of this Agreement. FMLP
may take reasonable steps to provide APC's accountant only with such information
as may be necessary to this verification, and APC's accountant shall report to
APC only that FMLP has complied with the terms of this Agreement or the extent
to which it has failed to do so. As a condition of the inspection, FMLP may
require APC's accountant to sign a confidentiality agreement to this effect. The
report to APC by its accountant shall be considered confidential Information.
Any amounts owed to APC as a result of the audit shall accrue interest from the
date such amount was paid by APC to FMLP at a rate equal to the current prime
rate quoted in the Eastern edition of the Wall Street Journal. Any amount owed
to APC as a result of such inspection shall be paid within thirty (30) days of
such inspection.

         4.3     MANUFACTURING COMPLIANCE. APC shall have the right to
reasonably inspect each FMLP MG-PFH manufacturing facility, during normal
business hours and on 10 days' prior notice, for the purpose of conducting a
quality assurance audit (described generally in Exhibit C) to verify FMLP's
compliance with the manufacturing requirements under Paragraphs 3.1 and 3.2.
These audits may be conducted by APC or by a consultant retained by APC and
approved by FMLP (which shall not unreasonably withhold its approval) or both.
FMLP may take reasonable steps to provide APC or its consultant only with such
information as may be necessary to verify FMLP's compliance and shall not be
required to provide any proprietary information which is not necessary for this
verification. The information obtained by APC in the course of the audit shall
be considered Confidential Information. As a condition of the audit by any
consultant retained by APC, FMLP may require the consultant to sign an
appropriate confidentiality agreement.

         4.4     FDA INSPECTION. FMLP shall give APC reasonable notice under the
circumstances of any impending inspection of an FMLP MG-PFH manufacturing
facility by the FDA or any such governmental agency of which it has advance
notice. FMLP shall advise APC promptly of any other FDA inspections of FMLP
relating to or that affect MG-PFH and their results, including copies (purged of
confidential or proprietary information, if any) of any FDA form 483s and other
FDA communications. The parties agree that any proprietary information presented
to the FDA as part of an FDA inspection may be withheld from APC or its
representative. The information obtained by APC in the course of any such audit
shall be considered Confidential Information.


                                       13
<PAGE>


                                   Article 5.
                             DRUG MASTER FILE (DMF)

         5.1     DRUG MASTER FILE REPRESENTATION. FMLP represents and warrants
that it has a complete DMF in compliance with all applicable FDA laws,
regulations, requirements, and guidelines.

         5.2     SUPPORT BY FMLP. FMLP shall maintain and support the DMF in
compliance with all applicable FDA regulations, requirements and guidelines.
FMLP shall give the FDA any required notice and file any required report to
permit APC to reference the DMF as provided in Paragraph 5.3.

         5.3     REFERENCE BY APC. APC shall have the right to reference the DMF
in APC's own submissions to the FDA in connection with the development, testing,
manufacture and approval for sale of the Product. FMLP shall notify APC of
changes to the DMF in such a manner as not to compromise confidentiality desired
by FMLP.

         5.4     FOREIGN REGISTRATION. APC may seek to have the Product approved
for sale by the appropriate regulatory authorities in one or more other
countries. If APC seeks to have the Product approved for sale in another country
and this approval requires submission of data and information substantially the
same as all or part of the data and information constituting the DMF (a "Foreign
DMF"), FMLP shall retain a qualified third-party consultant acceptable to APC at
APC's expense to work with FMLP in assembling the appropriate data and
information for submission of the Foreign DMF in FMLP's name to the appropriate
regulatory authority. The consultant shall be responsible for obtaining any
necessary translation into the local language. FMLP shall engage the consultant
on a confidential basis, and the consultant shall not reveal any of the contents
of the submission or proposed submission to APC. APC shall have the right to
reference the Foreign DMF in APC's own submissions to the foreign regulatory
authority in connection with obtaining the Product's approval for sale. In a
similar manner (i.e., protection of FMLP proprietary information), FMLP shall
cooperate with APC, as necessary, to facilitate the foreign use of the Product.
APC shall pay all submission fees required for the aforementioned, * this
Agreement.

                                   Article 6.
                                 CONFIDENTIALITY

         6.1     CONFIDENTIAL INFORMATION. Each party is in possession of
certain proprietary information (such party, a "Discloser"). Discloser is
willing to disclose certain information it possesses to the other party (such
party, a "Recipient") under the terms and conditions as set forth below.

                 (a) The term "Confidential Information" shall mean any and all
information, business plans or projections, customer lists, agreements, testing
protocols, test results, data or know-how, whether in written or in oral form
and whether technical or non-technical, as well as any sample, which relates to
the Products, provided, however, that the oral disclosure to


                                       14
<PAGE>


RECIPIENT of any information, data or know-how must be followed within thirty
(30) days by a writing substantially disclosing the same if such information,
data or know-how is to be considered as being Confidential Information. All
matters to be considered confidential shall be clearly marked with the legend
"Confidential and Proprietary Information," or a legend equivalent thereto.

                 (b) Discloser warrants that it has the full and unconditional
right to disclose to Recipient the Confidential Information covered by this
Agreement.

                 (c) For a period of five (5) years from the receipt of such
Confidential Information, Recipient agrees:

                     (i) to treat the Confidential Information which it receives
as it would its own proprietary information;

                     (ii) to prevent the disclosure of the Confidential
Information which it receives to any third party absent the prior written
consent of Discloser;

                     (iii) not to use the Confidential Information for any
reason other than the purposes of accomplishing this Agreement or as may be
agreed in writing by Discloser.

                 (d) Recipient shall be relieved of any and all obligations
under Paragraph (c) of this Agreement regarding Confidential Information which:

                     (i) was known to Recipient prior to receipt hereunder or is
generated for Recipient by persons who have not had access to or knowledge of
the Confidential Information disclosed hereunder, as documented, in either case,
by written records;

                     (ii) at the time of disclosure to Recipient was generally
available to the public, or which after disclosure hereunder becomes generally
available to the public through no fault attributable to Recipient or

                     (iii) is hereafter made available to Recipient for use or
disclosure by Recipient from any third party having a right to do so.

                 (e) Recipient may disclose information required by applicable
law, rule or judicial order to be disclosed, provided that prompt notice of a
request for such disclosure is given to Discloser prior to such disclosure. Such
disclosed information shall remain Confidential Information. APC may disclose
information to applicable regulatory authorities in connection with obtaining
regulatory approval for the Product or to licensees of the Product.

                                   Article 7.
                              TERM AND TERMINATION
         7.1     TERM. This Agreement shall remain in effect through the last
day of *             * (the "Initial Term"). The term of this Agreement shall be
automatically extended for a renewal term of *        (the "First Renewal Term")
unless, at least *


                                       15
<PAGE>


*                   prior to the expiration of the Initial Term, either APC or
FMLP gives the other notice that it does not want the First Renewal Term to go
into effect (in which case this Agreement shall expire at the end of the Initial
Term), provided that if FMLP is the party desiring not to renew the Agreement at
that time, its notice shall be deemed a notice pursuant to 7.2(d), and the
"exit" provisions shall apply. If the term of this Agreement is extended for the
First Renewal Term, the term of this Agreement shall be automatically extended
for a second renewal term of *               (the "Second Renewal Term") unless,
at least *           prior to the expiration of the First Renewal Term, either
APC or FMLP gives the other notice that it does not want the Second Renewal Term
to go into effect (in which case this Agreement shall expire at the end of the
First Renewal Term), provided that if FMLP is the party desiring not to renew
the Agreement at that time, its notice shall be deemed a notice pursuant to
7.2(d), and the "exit" provisions shall apply. This Agreement is subject to
early termination, as provided in Paragraph 7.2.

         7.2     TERMINATION. This Agreement may be terminated earlier than
Paragraph 7.1 provides under the following circumstances:

                     (a) AGREEMENT. This Agreement may be terminated at any time
by the written agreement of APC and FMLP.

                     (b) INSOLVENCY. This Agreement may be terminated by either
party by notice to the other in the event such other party shall dissolve, cease
active business operations or liquidate, or in the event such other party shall
have been determined to be insolvent by a court of competent jurisdiction, or
insolvency or reorganization proceedings shall have been commenced by such other
party, or such proceedings shall have been brought against such other party and
remained undismissed for a period of 60 days, or such other party shall have
made a general assignment for the benefit of creditors, or a receiver of all or
substantially all of such other party's assets shall have been appointed and not
discharged within 60 days.

                     (c) PARTY'S DEFAULT. This Agreement may be terminated by
either party if the other materially breaches any provision of this Agreement
("Default"), PROVIDED THAT a party shall not be deemed in default unless (i) the
claiming party has given the breaching party written notice specifying the
respects in which the claiming party claims the Agreement has been breached, and
(ii) the breaching party fails to remedy such breach, or fails to provide
information to the claiming party sufficient to show that it has not breached
this Agreement within the 60 day period following written notice or with respect
to breaches of Section 3.6, ten business days following written notice (the
"Cure Period"). Within one hundred twenty (120) days following the expiration of
Cure Period, the claiming party may serve final written notice of termination.

                     (d) FMLP'S EXIT FROM MEDICAL FLUOROCHEMICALS BUSINESS. This
Agreement *                                  , without the sale of assets and/or
intellectual property to a qualified third party or the spin-off or sale of a
division or subsidiary engaged in this business to a qualified third party, in
which case the following conditions and procedures shall apply:


                                       16
<PAGE>


                         (1) FMLP shall continue to supply MG-PFH to APC
pursuant to the terms of this Agreement *            . Notwithstanding any prior
history of orders or terms of this Agreement limiting the amount of MG-PFH APC
has or might order, APC may order and FMLP shall reasonably supply sufficient
quantities of MG-PFH to permit APC to maintain a substantial inventory of MG-PFH
in the event it is not able to qualify an alternate supplier *                 .

                         (2) FMLP shall provide any reasonable assistance at
APC's expense that APC reasonably requests to establish an alternate supplier
for MG-PFH.

                         (3) FMLP shall support the DMF as required in Paragraph
5.1 during         * , and until APC receives all MG-PFH pursuant to
Section 7.3(b) but shall have no obligation to support it thereafter.

                     (e) NO FDA APPROVAL. If, by * , APC has not received FDA
Approval for the Product, either party may terminate this Agreement on ninety
(90) days notice.

         7.3     CONSEQUENCES OF EXPIRATION OR TERMINATION.

                 (a) ALTERNATE SUPPLIER. If APC terminates this Agreement under
Paragraph 7.2(c) by reason of FMLP's Default, or FMLP otherwise terminates this
Agreement in breach of the terms herein, FMLP shall provide reasonable
assistance at APC's expense that APC reasonably requests to establish an
alternate supplier of MG-PFH. This assistance shall include describing and
explaining FMLP's process for manufacturing MG-PFH in such detail (including the
disclosure of FMLP proprietary technology, if necessary) as the alternate
supplier may require to manufacture MG-PFH in conformity to the Specification.

                 (b) APC PURCHASES. Upon the expiration of this Agreement, APC
shall be required to purchase FMLP's finished inventory of MG-PFH on hand at the
time of expiration and its inventory of MG-PFH and MG-PFH work-in-progress as
and when completed, such work-in-progress authorized by issued purchase orders
or maintained pursuant to the requirements of this Agreement; provided FMLP is
not in default hereunder.

                                   Article 8.
                             INSURANCE AND WARRANTY

         8.1     WARRANTY. The MG-PFH supplied under this Agreement by FMLP
shall conform to the Specification and shall be manufactured in compliance with
Paragraph 3.2. In accordance with Paragraph 3.12, FMLP shall analyze shipments
of MG-PFH to APC for conformance with these requirements. However, APC shall
have the responsibility to conduct its own analysis on each shipment of MG-PFH
received from FMLP to check for conformance with the Specification. FMLP shall
replace any MG-PFH that does not conform to the Specification or is not
manufactured in compliance with Paragraph 3.2, or refund the purchase price at
APC's option; such replacement or refund shall constitute APC's sole and
exclusive remedy with respect to such non-conformance. FMLP makes no
representation regarding any ingredient, chemical or constituent of a shipment
of MG-PFH that is not specified in the Specification as being an


                                       17
<PAGE>


impermissible ingredient, chemical or constituent of MG-PFH or impermissible
concentration of any of the foregoing ("Unspecified Constituents"). APC agrees
to assume all responsibility for Unspecified Constituents and the biological
consequences thereof in the medical applications of MG-PFH by APC, except that
APC assumes no responsibility for any Unspecified Constituents of the MG-PFH
that are present as a result of FMLP's failure to manufacture the MG-PFH in
compliance with Paragraph 3.2. As between FMLP and APC, APC shall be responsible
for providing reasonable evidence to FMLP that an Unspecified Constituent was
present due to FMLP's failure to manufacture the MG-PFH in compliance with this
Agreement. As between APC and FMLP, any liability shall be allocated based upon
applicable principles of comparative negligence, except FMLP's liability to APC
shall be limited to the value of the MG-PFH that was not manufactured in
compliance with Paragraphs 3.1 and 3.2. With regard to the Specification's
applicability to the medical application of APC, APC agrees and acknowledges
that FMLP does not have expertise in that field and that APC does have expertise
in that field, and APC shall be solely responsible for the suitability of MG-PFH
and the Specification for the medical application(s) that APC contemplates under
this Agreement. FMLP further warrants that it shall convey good title to all
MG-PFH supplied hereunder free and clear of any security interest, lien, or
other encumbrance. THE FOREGOING ARE FMLP's SOLE WARRANTIES HEREUNDER AND APC's
SOLE REMEDY FOR BREACH OF SUCH WARRANTIES, AND IS IN LIEU OF ANY AND ALL IMPLIED
OR STATUTORY WARRANTIES, INCLUDING WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

         8.2     RISK OF LOSS. APC is solely responsible for testing MG-PFH to
determine its physical or health hazards and for evaluating the methods by which
it may safely store, handle, transport, process, sell, dispose of or in any way
use, misuse or otherwise treat the MG-PFH supplied hereunder either singly or in
combination with other materials and FMLP shall have no liability to APC or any
third party for any claims by APC or any third party for losses or injury
incurred by APC or any third party relating to such testing, evaluation and
subsequent uses as a result of such testing and evaluation or
non-comprehensiveness of such testing and evaluation.

         8.3     INDEMNIFICATION. Except as set forth below or in Paragraph 8.6,
APC agrees to indemnity, defend and hold FMLP harmless from and against any
claim, demand, suit, loss, damage or injury of any kind whatsoever, including
attorneys' fees and expenses, regardless of where located, and regardless of
whether based upon negligence, strict liability, defective design, failure to
warn or otherwise(collectively "Claims"), resulting or arising directly or
indirectly from:

                 (a) APC's or APC's customer(s)' receipt or use of MG-PFH
(including storage, handling, transportation, processing, sale, disposal, use,
misuse or other treatment of MG-PFH); or

                 (b) the use of MG-PFH for the medical application(s) for which
APC utilizes MG-PFH, including, without limitation, claims based upon defects in
the Specification or claims based upon any Unspecified Constituent other than
Unspecified Constituents of the MG-PFH that are present as a result of FMLP's
failure to manufacture the MG-PFH in compliance with Paragraph 3.2.


                                       18
<PAGE>


                 The foregoing does not apply for Claims arising out of the
gross negligence or willful misconduct of FMLP or an intentional breach by FMLP
of the terms of this Agreement. FMLP agrees to defend, indemnify and hold
harmless APC from and against any and all Claims resulting from or arising out
of the gross negligence or willful misconduct of FMLP or its agents or employees
or any intentional breach by FMLP of the representations, warranties, or terms
set forth in this Agreement; provided that in the event FMLP fails to conform to
the Specifications and APC reasonably should have discovered such failure, FMLP
shall not indemnify APC.

         8.4     INSURANCE.

                 (a) APC agrees to obtain from responsible carriers and to
maintain in force during the term of this Agreement and for a period of five
years thereafter, commercial general liability insurance and excess liability
insurance policies (or the equivalent), including products liability coverage,
with contractual liability coverage, and limits of not less than * * combined
single limit per occurrence for bodily injury and property damage. APC agrees to
provide to FMLP certificates evidencing this coverage, and further, agrees to
name FluoroMed, L.P., FMLP, and its subsidiaries, directors, and employees, as
additional insured on the policy(ies) of insurance evidenced by certificates and
endorsements to the policy(ies) in a form to be approved by FMLP. With respect
to the insurance coverage afforded FMLP as contemplated by this Paragraph 8.4
and in recognition of assumption of risk as provided for in Paragraph 8.2, APC
will require its insurers to provide a waiver of subrogation in favor of FMLP.

                 (b) FMLP represents to APC that it maintains and agrees it
shall continue to maintain in force, during the term of this Agreement and for a
period of two years thereafter, commercial general liability insurance and
excess liability policies (or the equivalent), with contractual liability
coverage, and limits in excess of * combined single limit per occurrence for
bodily injury and property damage, FMLP agrees to provide to APC certificates
evidencing this coverage.

                 (c) The parties agree that to the extent liability for an
insured claim is allocated to APC under this Agreement, then APC's insurance
shall be primary to the insurance of FMLP, and, to the extent liability for an
insured claim is allocated to FMLP under this Agreement, then FMLP's insurance
shall be primary to the insurance of APC, and the other party's insurance shall
be considered as excess of and not contributing to the primary insurance or
deductible or of the party with primary liability.

         8.5     CLAIMS. NO CLAIM FOR BREACH OF THE WARRANTIES IN PARAGRAPH 8.1
OR FOR NON-DELIVERY OF AN ORDER OF MG-PFH SHALL BE GREATER IN AMOUNT THAN THE
PURCHASE VALUE OF MG-PFH TO WHICH SUCH CLAIM RELATES EXCEPT THIS LIMITATION
SHALL NOT APPLY IN THE CASE OF FMLP's GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR
INTENTIONAL BREACH OF A MATERIAL PROVISION OF THIS AGREEMENT. Any claims by APC
must be received by FMLP in writing within 60 days of the date of APC's actual
discovery of the claim.

         8.6     FMLP'S LIABILITY. FMLP shall be liable for all losses occurring
to its own employees, property, and business as result of its performance of
this Agreement, including but


                                       19
<PAGE>


not limited, to personal injury, property damage, regulatory (including but not
limited to OSHA and EPA) and other legal compliance, and other business injury
or liability, regardless of whether based upon negligence, strict liability or
otherwise ("FMLP Claims and Losses").

         Except to the extent that APC has agreed to indemnify FMLP under this
Agreement, FMLP shall indemnify, defend and hold APC harmless from and against
any claim demand, suit, loss, damage or injury of any kind whatsoever, including
attorneys' fees and expenses, regardless of where located, and regardless of
whether based upon negligence, strict liability or otherwise, resulting or
arising directly or indirectly from FMLP Claims and Losses.

         8.7     Limitation. FMLP shall not be liable to APC in contract or
tort, including negligence and strict liability, for any indirect, special,
incidental or consequential damages arising out of FMLP's performance or
non-performance hereunder.

                                   Article 9.
                               GENERAL PROVISIONS

         9.1     YEAR 2000 COMPLIANCE. FMLP has (i) initiated a review and
assessment of all areas within its business and operations (including those
affected by suppliers, vendors and customers) that could be adversely affected
by the "Year 2000 Problem" ( that is, the risk that computer applications used
by FMLP (or suppliers, vendors and customers) may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with the timetable. FMLP represents that its
computer applications (including those of its suppliers, vendors and customers)
that are material to its business and operations will be able to perform
properly date-sensitive functions for all dates before and after January 1,
2000, except to the extent that a failure to do so could not reasonably be
expected to materially and adversely affect the condition (financial or
otherwise) or operations of FMLP.

         9.2     ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other. Notwithstanding the foregoing,
either party may assign this Agreement without such consent to a wholly-owned
subsidiary or, in the case of APC, to a transferee of substantially all of the
assets of its business unit dedicated to the Product. Notwithstanding the
foregoing, APC may assign this Agreement without the consent of FMLP to a
licensee or sublicensee of its rights to make, use, manufacture or sell the
Product.

         9.3     NOTICE. ANY notices permitted or required to be given hereunder
shall be effective upon receipt of the receiving party if they are delivered
personally, by certified mail (return receipt requested), by overnight air
courier (with return receipt), or by facsimile machine (with proof of
transmission):


                                       20
<PAGE>


                 (a)      in the case of APC, to:

                          Duane J. Roth
                          President and CEO
                          ALLIANCE PHARMACEUTICAL CORP.
                          3040 Science Park Road
                          San Diego, CA  92121
                          FAX:  619/558-5306

                          with required copies to:

                          General Counsel
                          ALLIANCE PHARMACEUTICAL CORP.
                          3040 Science Park Road
                          San Diego, CA  92121
                          FAX:     619/678-4133

                 (b)      in the case of FMLP, to:

                          William S. Brown
                          Vice President
                          FLUOROMED L.P.
                          2350 Double Creek Drive
                          Round Rock, TX  78664
                          FAX:  512/255-8298

                          Notices may be sent to any changed address or changed
title holder of the above of which the sender has actual knowledge.

         9.4     INTEGRATION. This Agreement and the CDA represents the entire
agreement of the parties with respect to its subject matter, and supersedes any
and all prior agreements, understandings, promises and representations by any
party to any other respecting its subject matter.

         9.5     NO BROKERS. No party to this Agreement employed any broker or
agent in connection with this transaction or its subject matter.

         9.6     CAPTIONS; EXHIBITS. All captions contained in this Agreement
are inserted for convenience of reference only and shall not be deemed a part of
this Agreement. The Exhibits are incorporated into and deemed a part of this
Agreement.

         9.7     SEVERABILITY. If any provision of this Agreement is held
unenforceable, the provision shall be regarded as severable from this Agreement
and the remaining provisions shall remain in full force and effect.


                                       21
<PAGE>


         9.8     STATUS OF THE PARTIES. APC and FMLP shall not be deemed to be
partners, joint venturers or one another's agents, and neither shall have the
right to act on behalf the other except as expressly provided herein or
otherwise expressly agreed in writing.

         9.9     WAIVER. The failure or neglect of APC or FMLP to enforce the
terms and conditions of this Agreement shall not be deemed a waiver thereof nor
shall it be deemed a condonation of any breach. Such failure or neglect shall
not be deemed a waiver or condonation of any later breach. All remedies under
this Agreement are cumulative and are not exclusive of other remedies.

         9.10    AMENDMENT. This Agreement may only be amended by a writing
signed by the parties hereto and expressly designated as an amendment to this
Agreement.

         9.11    BINDING; EFFECT: Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto, their
subsidiaries, divisions, business units, successors and permitted assigns,
including without limitation, the APC Affiliates.

         9.12    FORCE MAJEURE. A party shall not be liable to the other for
inability to perform any of its obligations under this Agreement when its
inability is the result of an act of God, earthquake, epidemic, order of civil
or military authorities, flood, tornado, wind storm, fire, war, civil
disturbance, strike or other labor dispute, inability to obtain raw materials,
vandalism, or other natural, civil or commercial disturbance, or any other
occurrence, over which the party has no reasonable control, whether similar or
dissimilar to the causes listed above. Lack of finances shall not be deemed a
circumstance not within a party's control.

         9.13    CHOICE OF LAW. This Agreement shall be construed in accordance
with the laws of Texas without giving effect to its choice of law provisions.

         9.14    COUNTERPARTS. This agreement may be executed in counterparts,
to be evidenced by the simultaneous (within physical limits) exchange of
signature pages (telefaxed, if necessary) and confirmatory cover letters, and
the counterparts together shall be regarded as a single instrument binding on
the parties.


                                       22
<PAGE>


                 WHEREFORE, the parties have executed this Agreement as of the
date of the latest signature below.

ALLIANCE PHARMACEUTICAL CORP.




By:
         -------------------------------------
         Harold W. DeLong
         Executive Vice President, Business Development

Date:    June 25, 1999
         -------------------------------------


FLUOROMED L.P.




By:
         -------------------------------------
Name:    William S. Brown
         -------------------------------------
Title:   President
         -------------------------------------
Date:    July 9, 1999
         -------------------------------------





                                       23
<PAGE>


                                                                       EXHIBIT A

                          ALLIANCE PHARMACEUTICAL CORP.

                                  CONFIDENTIAL


                        COMPONENT PURCHASE SPECIFICATIONS

                            PURIFIED PERFLUOROHEXANE

*





<PAGE>


                                                                     EXHIBIT "B"


                                 PRICE SCHEDULE

Medical Grade Perfluorohexane, as described in Exhibit A

<TABLE>

--------------------------------------------- -------------------------------------------
<S>                                           <C>
                     *                                             *
--------------------------------------------- -------------------------------------------
                     *                                             *
--------------------------------------------- -------------------------------------------
                     *                                             *
--------------------------------------------- -------------------------------------------
                     *                                             *
--------------------------------------------- -------------------------------------------
                     *                                             *
--------------------------------------------- -------------------------------------------

</TABLE>


Supply Cylinder Charges (Refer to Paragraph 3.8)


Supply Cylinder rental charges:

         *


         .

Supply Cylinder Replacement charges:

         *

         .



<PAGE>


                                                                       EXHIBIT C


                        VENDOR QUALITY EVALUATION PROGRAM

*